The boss of Danish conglomerate A.P. Moller-Maersk has warned the group’s oil division will have to close some sites and cut operating costs if oil prices remain at their current level.
Nils Smedegaard Andersen, chief executive, said that if prices stay around $60 per barrel, it will reduce revenue in the oil unit by one-third from the level of 2013.
He added: “As all costs, except taxes, are fixed it is obviously something we have to take very seriously. And we would have to do some things.”
A spokeswoman for Maersk Oil North Sea UK, operator for the £3billion Culzean gas field being developed in the UK North Sea, said the firm was not in a position to make any further comments” about potential implications of the low oil prices.
But Mr Andersen said he would focus on reducing operational costs and exploration costs, and mainly explore for new oil in areas where production costs would be low.
Some of Maersk Oil’s existing production sites will have to shut down earlier than planned if the oil price stays at current levels, he warned.
But he also said that oil prices between $70 and $80 per barrel were a realistic expectation and that view is shared by Arab Opec producers, who expect prices to rebound to that level by the end of next year as a global economic recovery revives demand.
Maersk Oil has a target to produce 400,000 barrels per day in 2020, up from 238,000 in the third quarter this year.
Mr Andersen said: “It is very important to say to the market and the organisation that we have these ambitions, but also that if they are not reasonable any longer we would have to adjust to the world situation.”
He has previously said Maersk’s investment in Angola’s Chissonga oil field is under consideration as a result of falling oil prices.
Maersk Oil UK was awarded five licences in the latest UK offshore licensing round, three of which will be operated by the Danish-owned company.
It is also a partner in the Golden Eagle development, from which production started in October. Golden Eagle, about 44miles north-east of Aberdeen, is expected to hit peak output of 70,000 barrels of oil a day next year.
Maersk Oil, including the UK North Sea business, made profits of £139.8million i nthe third quarter of 2014 – up from £119million a year earlier, which the parent said was helped by lower exploration costs.
Recommended for you
